Mitsui Sumitomo Insurance Co. said Tuesday it has begun marketing financial derivatives to enable companies to hedge against the risk of falls in the price of shares they hold in other firms.
The derivatives provide coverage against stock price falls emanating from a range of specified risks, such as an earthquake, the nonlife insurer said.
They entitle their holders to sell designated stockholdings at values specified in the derivatives contracts, it said.
Mitsui Sumitomo Insurance is the first Japanese insurer to acquire an official license to engage in derivatives transactions associated with securities holdings.
The insurer, which has tied up with American International Group, will take advantage of AIG's knowhow in the derivatives field.